The Closing Print live trading and financial blog during market hours.

August is one of the worst months of the year when considering seasonality. The NYSE faired worse than the S&P500, Nasdaq-100 and Russell 2000; these three indices showed less downside risk during the month. Defensive stocks are showing signs of instituional buying as a result.

 

NYSE-Seasonality-August

A month ago we discussed how the month of July was the best month of the year for technology, going back 5,10 or more years. Quite a few technology stocks are now beginning to shows signs of distribution at highs. In addition, this selling comes on the heels of some substantial gains in FANG stocks. It is for these reasons that we feel it is prudent to scale back in technology positions at this time.

Consumer Staples – XLP – Defensive Sectors

Consumer staples (XLP) shows momentum shifting to the bulls, as volume flows into the sector. MACD gave a buy signal over a week ago and RSI suggests higher prices from here as more investors notice the change. Scaling back on technology, while increasing our ratio in defensive stocks (XLP) will help balance our portfolio.

XLP-07-28-2017

As a result, we have been buying consumer staples stocks over the past few days. We will add as price action confirms our decisions. For more winning stock picks here are the top holdings for XLP.

Conagra – Consumer Staples

CAG reported in late June, so earnings are of little concern. Momentum has shifted as institutions buy shares at a discount to 52 week highs. Volume is beginning to increase, as RSI lifts from oversold conditions. We will add as the stock rises. We sent out a buy signal around 2:05PM, before prices pushed through the dashed horizontal resistance zone. Use the ToD setup for new entries and intial stops.

CAG-07-28-2017

SAFM, CPB and HSY were all started this week. We will add to these as well, as conditions permit. The next pullback to the rising 9ema, that is met with buyers will be our cue as usual.

Happy Trading,

Vinny

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